The energy regulator, Ofgem, failed to implement its own consultants' recommendation a year ago to tighten up the way energy companies report trading activities – and admits it may now have to revisit the issue.

The energy watchdog also confirmed it was tipped off about possible manipulation of the wholesale market on 17 October – more than three weeks before the energy secretary, Ed Davey, was told.

Caroline Flint MP, the shadow energy and climate change secretary, who has already called for Ofgem to be scrapped for a tougher regulator, said the public was owed a proper explanation of what was going on.

Ofgem and the Financial Services Authority are both currently investigating alleged price-fixing by traders working for energy companies or other investors, following claims by a whistleblower working for a price reporting agency.

Ofgem confirmed yesterday that a report by the accounting firm BDO last year into improving reporting transparency had included a recommendation that Ofgem should "require the reporting of trading function results" by energy companies.

In January, Ofgem said it was moving ahead with various initiatives to improve transparency, but that it was not going to implement the BDO's exact recommendation. The Consumer Focus watchdog warned of an accounting "black hole" if trading arm activity was left out.

But Ofgem says the BDO proposal would not have alerted it to the problems identified by the whistleblower and it was justified in putting forward an amended version.

"Ofgem implemented the majority of our consultants BDO's recommendations. Recommendation 4 called for the reporting of trading function results," it told the Guardian .

"BDO themselves recognised significant complications to implementing this approach. Taking into account our consultants' concerns, Ofgem chose to adapt BDO's proposals so now companies have to publish in which parts of the business different activities, including trading, are taking place.

"The BDO review was part of a raft of major reforms from Ofgem which aims to make the energy market simpler, clearer and fairer for consumers. If evidence comes to light that we need to look closely at companies' statements again to protect consumers we will do so. "Our consultants BDO advise us that neither the approach we took, nor their original recommendation, would have given Ofgem sufficient information to identify or investigate wholesale gas trading irregularities."

However, Flint said Ofgem had "ducked the opportunity to get tough" with the energy companies, which she accused of "ripping off" hard-pressed families.

"First we learned that Ofgem was tipped off about these reports of dodgy trading in October and appears to have done nothing about it. Now it turns out Ofgem was warned almost a year ago that there were serious shortcomings in the regulation of trading in the energy market, which it ignored. In light of the allegations of price- fixing in the gas and electricity markets, the public deserves an explanation as to why Ofgem failed to act on these expert warnings."

Energy companies can currently participate both in speculative trades for the pursuit of profit and non-speculative trades for the cost-effective management of supply to customers. At the moment, however, they are not required to report to Ofgem on the results of their trading.

As a result, there is considerable scope for companies to give a misleading picture of their genuine generation costs and under-report their profitability, Flint argues.

So far Ofgem has declined to publish BDO's full report and two weeks ago Flint submitted a freedom of information request to Ofgem to force its disclosure. The regulator said it was working on this request. The government has said it is treating the allegations of rigging in the wholesale gas market seriously.

Ofgem previously declined to say when it had first been told of the problems by the ICIS Heren PRA when asked by The Guardian. However, it has now confirmed the date as 17 October.

It said it had been in the process of examining the material and chose, as an independent regulator, not to tell the secretary of state immediately until the Guardian went public with the information.

An Ofgem spokesman said: "As with all information that may have the potential to lead to enforcement action we do not routinely disclose details of our inquiries in order not to jeopardise any investigation or possible enforcement action." He added: "We also have a duty under our whistle blower procedures to protect the confidentiality of details received where that has been requested."

At a select committee hearing on Tuesday, Davey defended Ofgem's delay. "If Ofgem were to knock on my door every time they had allegations of price-fixing, they would find I had other things to do," he said.

A spokesman for the Department of Energy and Climate Change denied that this implied Ofgem regularly received such allegations, but said it served to underline that the case – centering on price movements around 28 September was being taken very seriously.